Officials Charged with Conspiracy, Fraud, Money Laundering

WASHINGTON, D.C. – A federal grand jury in Columbus, Ohio, has indicted seven
former executives of National Century Financial Enterprises (NCFE) on charges
of conspiring to defraud investors by lying to them and others about how the
investors’ funds would be used, diverting the funds, then hiding the shortfall
by moving money back and forth between subsidiaries’ bank accounts and creating
phony reports and records to cover up the scheme, the Department of Justice
announced today.

The indictment alleges that instead of using the investors’ funds as they
promised, the defendants diverted funds to, among other purposes, make
unsecured advances and loans to healthcare companies owned by NCFE or its
principal shareholders, Lance Poulsen, Rebecca Parrett and Don Ayers.

Named in the indictment are:

Lance K. Poulsen, the president, chairman and a director of NCFE since its
inception in 1991. Poulsen was responsible for the overall marketing, funding
and operation of NCFE and its subsidiaries. In addition, he was an officer,
director and owner of at least six related entities. He is charged with
conspiracy, securities fraud, wire fraud, mail fraud and money laundering
charges.

Rebecca S. Parrett, a vice chairman, secretary, treasurer and an officer,
director and owner of NCFE and certain of its affiliates. Parrett was
responsible for providing instruction on disbursing funds, preparing reports
for NCFE and other duties. She is charged with conspiracy, securities fraud,
mail fraud, wire fraud and money laundering charges.

Roger Faulkenberry, director of securitizations for NCFE from 1994 until
December 2000. Faulkenberry served as the point of contact with the rating
agencies responsible for evaluating the soundness of NCFE’s investments. He is
charged with conspiracy, securities fraud, wire fraud, mail fraud and money
laundering charges.

James Dierker, vice president in charge of client development for NCFE from
January 1999 until January 2001. Dierker is charged with conspiracy, mail
fraud, wire fraud and money laundering charges.

Jon Beacham, director and vice president of securitizations from about January
2001 until November 2002. Beacham is charged with conspiracy, securities
fraud, wire fraud, mail fraud and money laundering conspiracy.

“An exhaustive investigation by the FBI, IRS, Postal Inspectors and Immigration
and Customs Enforcement agents found evidence that the company executives bilked
investors by building a financial house of cards with deception, sleight-of-hand
financing, and accounting misdeeds,” said U.S. Attorney Lockhart.

“Friday’s indictment reinforces IRS Criminal Investigation’s commitment to
aggressively pursue corporations and their officers who use their positions of
trust to carry out illegal activities,” said Acting Chief John H. Imhoff Jr. of
Internal Revenue Service Criminal Investigation.

NCFE, based in Dublin, Ohio, bought medical accounts receivable from health
care providers around the country, then financed the purchases by selling
securities in the form of notes to large institutional investors outside Ohio.
In their promotional materials, NCFE billed themselves as the “nation’s leading
supplier of working capital to the medical industry.” The company collapsed in
November 2002.

According to the indictment, NCFE operated as a financial services holding
company. Through its subsidiary corporations, such as NPF VI and NPF XII, the
company bought accounts receivable from hospitals, nursing homes and other
health care providers and medical concerns. The subsidiaries would issue
health care receivables securitization program notes. NCFE employees would
sell these securities in private placements, promoting them as conservative and
safe investments.

According to the indictment, NCFE executives diverted the money into other
companies they owned, used some of the money for operating expenses for NCFE,
and provided unsecured advances and loans to clients, third parties and others.

The indictment alleges that the defendants conspired to conceal cash shortages
from trustees by moving funds into an account the day before a report was due,
then moving the cash back into another account the day it was to be examined.
In one such instance, on Jan. 2, 2002, the defendants ordered $148 million
moved from one investment portfolio to another so that it would appear to be in
compliance. The next day, they moved the $148 million back to the other
portfolio so that it too would appear to be in compliance.

According to the indictment, the defendants prepared and distributed false
financial reports to hide their actions from investors and trustees.
Investigators found reports marked “NPF VI – Reported” and “NPF VI – Actual”
and other similar documents when analyzing company records seized by FBI agents
from NCFE’s headquarters in November 2002.

The maximum penalty for each count of money laundering and money laundering
conspiracy is 20 years imprisonment and a $500,000 fine. The conspiracy to
violate statutes of the United States, and each count of wire fraud and
securities fraud carries a penalty of five years imprisonment and a $250,000
fine.

This case was investigated by the agents and inspectors of the FBI, IRS
Criminal Investigation, U.S. Immigration and Customs Enforcement and the U.S.
Postal Inspection Service, with assistance from the Dublin (Ohio) Police
Department and Franklin County (Ohio) Sheriff’s Department. It is being
prosecuted by Assistant U.S. Attorney Dale E. Williams Jr. of the Southern
District of Ohio and Criminal Division Trial Attorneys Mark Yost and Patrick
Murphy of the Asset Forfeiture and Money Laundering Section and Colleen Conry
and Jeffrey Neiman of the Fraud Section.

An indictment is merely an accusation. All defendants are presumed innocent of
the charges and it is the government’s burden to prove a defendant’s guilt
beyond a reasonable doubt at trial.